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Logo of Phnom Penh Post newspaper Phnom Penh Post - Loans, deposits mirroring growth

Loans, deposits mirroring growth

Traffic passes in front of an Acleda Bank Plc branch on Monivong Boulevard yesterday in Phnom Penh. Photograph: Hong Menea/Phnom Penh Post

Loans and deposits at Cambodia’s 32 commercial banks rose by more than 30 per cent and 20 per cent, respectively, year-on-year in the first half of 2012, which the central bank governor and economists said reflected the growth in economic activities even as export growth has slowed.

According to official data from the National Bank of Cambodia (NBC), outstanding loans rose 35 per cent to 443,000 borrowers over the first half of 2012, compared to 286,000 during the same period last year, while total deposits rose 15 per cent to 1,369,000 compared to 1,164,000.

“These improvements in loans and deposits, which including the precautionary measurements taken by the NBC, have lowered the non-performing loan [NPL] rate to 2.4 per cent of total loans,” Chea Chanto, NBC’s governor said during a meeting last Thursday.

“What is important is that the banks have expanded by 11 branches and also opened representative offices abroad, in places such as Laos and Myanmar,” he said.

Khin Pisey, senior researcher for Economic Institute of Cambodia said that the improvement in Cambodia’s banking sector emphasised the improvements in the economy.

“It is pretty good proof that our economic activities are extremely active because our people need money to expand their businesses and investments,” he said. “But, at the same time, it also brings risks, such as loan defaults.”

“If some banks try to ease their loan requirements, it will cause problems in the long run,” he said.

The establishment of a credit bureau will play a major role on in avoiding further risk by keeping and showing borrowers financial history. It’s a good mechanism to reduce the risk of default, he said.

In Siphann, Acleda’s senior vice president and head of the credit division said that the growth in loans was up to US$128 million in the first half of the year compared to $83 million for the same period in 2011, a jump of 54.21 per cent, while the total growth in deposits was $176 million compared to $127 million, an increase of 38.58 per cent.

“Of course, we do recognise the improvements in the economy pushing to increase the number of new businesses, while the agricultural sector has also been performing well,” he said, adding that in terms of the number of customers, loans to businesses account for 35 per cent of the total loans while agricultural loans account for 43.63 per cent.

According to the NBC’s data, loans for trading accounts account for 32 per cent, real-estate 16 per cent, agriculture 10 per cent and the manufacturing sector of 9 per cent.

Chea Chanto said that although the current situation in the West and some developing economies are slowing down our growth, Cambodia’s economy is still enjoying remarkable growth due to the supportive sectors of agriculture, tourism, garment manufacturing and foreign direct investment as well as the banking industry.

The banking industry has also improved remarkably in size as well as operational dimensions, which definitely reinforced the Kingdom’s economic development, he said.

“The NBC has been trying to manage the exchange rate, price stability for goods and maintain a manageable rate of inflation," said Khin Pisey. “I don’t think the economic storm in the West will affect us, because we only use our money here. Of course, there will be a very small effect but it is of no concern.”

Ngoun Sokha, director general for NBC told the Phnom Penh Post earlier this month that the central bank would postpone providing any new banking licences this year, as there need to be more restrictions in place before Cambodia provides more banking licences.

To contact the reporter on this story: May Kunmakara at



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